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<PAGE>
March 5, 1999
Dear Stockholder:
We are pleased to provide you with the 1998 Letter to Stockholders which reviews
the Company's activities during the past year and the new Technology and Product
Brochure which highlights the commercialization of our core products and
technologies.
By now you should have received the Notice of Annual Meeting, Proxy Statement
and related materials for the Company's upcoming annual meeting of stockholders,
to be held at 10:00 a.m. (EST) on Thursday, March 25, 1999 at the Presidential
Banquet Center, 4548 Presidential Way, Kettering, Ohio. A short distance from
the meeting site is Ovonic Energy Products, Inc., GM Ovonic's recently opened
and expanded nickel metal hydride battery manufacturing facility for electric
and hybrid electric vehicles. Tours of Ovonic Energy will be available following
the conclusion of the annual meeting.
We look forward to seeing you at the annual meeting. If you are unable to attend
the meeting in person, it is nevertheless important that you vote on the
proposals being presented at the meeting. In the event you have not yet signed
and returned the proxy card that was previously mailed to you, please do so at
your earliest opportunity. For your convenience, a duplicate proxy card and
return envelope are enclosed.
Thank you again for your support.
Sincerely,
/s/ Stanford R. Ovshinsky /s/ Robert C. Stempel
- ------------------------------------- ----------------------------
Stanford R. Ovshinsky Robert C. Stempel
President and Chief Executive Officer Chairman
ECVCM-CL3
<PAGE>
ENERGY CONVERSION DEVICES, INC.
1675 West Maple Road
Troy, Michigan 48084
USA
Telephone: 248.280.1900
Fax: 248.280.1456
e-mail: [email protected]
www.ovonic.com
1998 LETTER TO STOCKHOLDERS
Dear Stockholders:
The technology invented and developed by ECD over the years has been gaining
wide industry and public acceptance. Now our task is to move forward the
commercialization of these technologies, making products for everyday use.
Building on ECD's extensive, basic and fundamental patent portfolio, we are
taking the steps towards profitability, capitalizing on the many years of
investments in our inventions.
ECD, an energy and information company, has three core product areas:
- - Information and data storage (phase-change optical and electronic memories)
- - Energy generation (flexible, thin-film photovoltaic products)
- - Energy storage (nickel metal-hydride batteries)
All of these product areas are based on the company's proprietary amorphous
and disordered materials. An important complementary business is our Production
Technology and Machine Building Division, which designs and builds many of the
special machines used by ECD and its joint ventures and licensees to manufacture
products. Information about ECD's products can be found in our new Technology
and Products brochure.
This annual stockholder letter is a departure from those of the last several
years. Prior letters, discussing the business, focused on technology and our
achievements during the year. Now it's time to talk about our progress in
commercialization and creating shareholder value. Let's look at each of our
core product areas in detail, reviewing the past year's activities in the
context of our continuing efforts towards meeting these objectives.
<PAGE>
Information Technology -- Optical Memory
Walk into any video or electronics store and you're likely to see more and more
rewritable compact disks (CD-RW) and pre-recorded digital versatile disk (DVD)
titles on the shelves. Indeed, industry analysts estimate that the total DVD
market will grow to a $2 billion business in the intermediate term, replacing
VCR and CD-ROM applications. ECD's high-capacity phase-change optical memory
technology has clearly become the technology of choice for rewritable CD and
DVD, and it is the most likely near-term income growth opportunity for the
company. ECD originated phase-change optical memory and has licensed this
technology to leading electronic and computer companies, including Sony,
Matsushita/Panasonic and Toshiba. Phase-change refers to the ability of
amorphous (disordered, non-crystalline) material to be changed to an ordered
crystalline state by optical or electrical means and reversed by the same
process. This allows for recording and playback using digital media, much like
a typical tape recorder. Phase-change rewritable technology is used in PD,
CD-RW, DVD-RAM, and DVD-RW disks.
Both of the 650 megabyte rewritable optical memory disk formats -- PD and CD-RW
- -- use ECD's phase-change technology. Rewritable DVD disks are available in two
data formats: DVD-RW, developed by Sony, and DVD-RAM, developed by Matsushita
Electric Industrial Co. Ltd. Both use ECD's proprietary phase-change rewritable
optical memory technology. While it is too early to speculate whether one format
will dominate in the marketplace, ECD's patents cover disks manufactured with
both formats, and both pay a royalty on the recording media based on factory
sale price.
Information Technology -- Electronic Memory
In January 1999, ECD announced the formation of a joint venture between ECD and
Mr. Tyler Lowrey, a world-recognized authority in semiconductor memory
technology and the former vice chairman and chief technology officer of Micron
Technology, Inc., of Boise, Idaho. Mr. Lowrey will be president and CEO of the
new joint venture, "Nanovonics, Inc.," and Stanford R. Ovshinsky, ECD's
president and CEO, will be chairman. Mr. Lowrey also has joined ECD as a vice
president and director. Ovonic Unified Memory is a unique, thin-film,
nonvolatile, solid-state memory that offers key competitive advantages for the
microelectronic memory and embedded logic marketplace in terms of cost,
performance and scaling over conventional
<PAGE>
solutions. Microelectronic memory devices are used in a wide variety of
applications, including computers, cell phones, graphics-3D rendering, GPS,
video conferencing, multimedia, Internet networking and interfacing, digital
television, games, PDA, modems, DVD, ATM machines and pagers. ECD is very
pleased with the opportunity to work with Mr. Lowrey to develop and
commercialize the next advance in memory technology. In addition to the
licensing potential, ECD will be able to participate in the manufacturing of
the devices. The microelectronic memory market is more than $25 billion.
Energy Generation -- Photovoltaics
With events like the Kyoto Conference in 1997, world leaders are coming to the
realization that alternate energy sources are necessary as a solution to global
energy problems. Since the 1970s, ECD -- through its Solar Energy Division --
developed the materials and technology essential to allow a shift to solar
energy, making PV -- the direct conversion of sunlight into electricity --
viable for large-scale terrestrial applications. Additional information about
ECD's technology and products manufactured by our joint venture with Canon Inc.
of Japan -- United Solar Systems Corp. (United Solar) -- is contained in our
new Technology and Products brochure.
In January 1999, Mr. Kenneth R. Baker joined ECD as vice chairman and chief
operating officer. Mr. Baker recently left General Motors after a long career,
most recently as vice president and general manager of GM's Distributed Energy
Business Unit. While Ken will be active in all areas of ECD's business, he will
focus initially on photovoltaics and NiMH batteries for stand-alone, distributed
power applications. His experience in this field will be helpful as we continue
to expand our photovoltaic activities.
During 1998, United Solar increased sales by 30 percent and was able to
demonstrate a number of real-world, practical applications of its solar electric
lighting systems, beginning with the supply of 360 systems to electrify Anglican
Churches throughout rural Uganda. United Solar's products, which are
commercially offered under the Uni-Solar(R) brand name, include structural
standing seam panels, architectural standing seam panels and roofing shingles.
In addition to receiving the Underwriters Laboratory (UL) listing, United Solar
products have passed all major product qualification tests, including The
Institute of Electronics and Electrical Engineers, The International Energy
Commission and ISPRA (the European equivalent of Underwriters Laboratory). All
Uni-Solar Roofing products now come with a 20-year performance warranty.
<PAGE>
Worldwide PV module shipments were 160 MW during 1998. Mr. Paul Maycock, a noted
photovoltaic industry analyst, predicts that shipments could reach 640 MW in an
accelerated market during 2005. United Solar has in place a five MW capacity
plant in Troy, Michigan. Plans are underway to increase capacity to 25 MW to
facilitate more cost-effective production.
The rapidly growing demand for telecommunication services is increasing the need
for lightweight, low-cost solar panels for use on low-earth orbit satellites
(LEOS). However, the cost of launching the hundreds of satellites needed to
support these applications can exceed $10,000 per pound. United Solar space PV
products were developed to offer an ultra-light, low-cost alternative to
conventional space PV modules made of crystalline silicon or gallium arsenide.
The company's thin-film PV material exceeds the power density requirement of 100
W/kg and is well within the target cost of $30 to $60/watt established by the
telecommunications industry. In addition, laboratory testing has shown that
United Solar's PV products are radiation-hard and have superior performance at
the high temperatures encountered in space.
In November 1998, ultra-light space solar modules were successfully installed
on the MIR Space Station and are now undergoing performance testing and
qualification for a variety of space applications. The modules began providing
telemetric data shortly after installation, confirming their expected
performance from earth-based space simulation tests, and data are being received
continuously. It is anticipated that data transmission will continue for as long
as MIR remains in orbit. United Solar's installation on MIR marks the first time
advanced thin-film amorphous solar modules have been installed on an orbiting
spacecraft.
The solar modules are the subject of a new joint development and testing program
between United Solar; ECD; KVANT, the leading Russian enterprise in space PV
technology; RSC Energia (Energia), a leading producer of space vehicles and
manager of the MIR Space Station; and Sovlux, a Russian-American joint venture
owned by ECD, KVANT and the Russian Ministry of Atomic Energy.
United Solar's ultra-light solar cells were assembled into modules by KVANT,
which is responsible for the PV arrays on all the Soviet/Russian space vehicles.
They were launched into space in late October by Energia and installed in
November by two cosmonauts during a work session in open space.
United Solar also is continuing its aggressive development program. Among the
company's current projects is a solar cell that uses a one to two mil thick
Kapton(R) substrate and could result in a specific power density exceeding 2,000
W/kg, more
<PAGE>
than 10 times the power density of a conventional space-grade solar cell. United
Solar's low-cost photovoltaic technology is expected to have widespread
application in the international space programs and especially in planned
telecommunications networks, which will depend on large constellations of
low-earth orbit satellites and stratospheric platforms. This is an exciting
growth area for the company. It is expected that some terrestrial applications
will spin off this development such as emergency power generation and portable
power systems for field operations.
Energy Storage -- NiMH Batteries
Beginning in the late 1980s, the first Ovonic nickel metal-hydride (NiMH)
batteries were commercialized under license from ECD's subsidiary, Ovonic
Battery Company, Inc. (Ovonic Battery), and introduced into the marketplace for
portable electronics applications. Today, all significant manufacturers of small
batteries are under license from Ovonic Battery, and NiMH is the battery of
choice with sales of approximately 600 million batteries in 1997. The market
continues to grow as consumers find the high energy, high power, rechargeable
NiMH battery to be a cost-effective alternative to many other types. ECD
receives a royalty on consumer batteries based on factory sales price, and while
unit volume is rapidly increasing, manufacturing costs have been decreasing.
While slowing the rate of royalty income growth, this also increases our market
expansion.
Based on the progress in consumer batteries, we believe that larger NiMH
batteries, such as those used to power electric vehicles, are on track to meet
the industry cost targets established for these batteries. ECD and its Ovonic
Battery subsidiary have invested significant time and money in the "Family of
Batteries" development program for electric (EV) and hybrid-electric (HEV)
vehicles. The batteries installed in concept vehicles were first shown in
January 1998 (reference 1997 Letter to Stockholders). During the year, we have
had numerous overtures from vehicle makers interested in obtaining NiMH battery
packs for evaluation in both EVs and HEVs. We expect a number of these
evaluations to lead to supply contracts for our joint manufacturing venture with
General Motors, GM Ovonic. GM Ovonic and its wholly owned subsidiary, Ovonic
Energy Products, Inc., in Kettering, Ohio (Dayton area), are currently supplying
first-generation NiMH battery packs for the Chevrolet S-10 EV and the 1999 EV1.
The NiMH batteries were installed in the EV1 beginning December 1998, and
initial customer reaction has been overwhelmingly positive. Consider the
following unsolicited customer feedback:
<PAGE>
- - An EV enthusiast, who had been driving an early EV1 with lead-acid batteries,
completed a 78-mile trip from the Hollywood Hills to Northern Malibu and
back, and had 44 miles range remaining. Calling the 1999 EV1 "absolutely
amazing," he said the trip "would have been impossible with the lead-acid
EV."
- - A customer who drove from Phoenix to Tucson, Arizona, at normal highway
speeds, a distance of 115 miles, had 30 miles range remaining, calling
the 1999 EV1 a "revolution in range."
- - Another EV1 driver described the performance as "awesome."
The GM 1999 EV1 utilizes a high-performance, longer-lasting GM Ovonic NiMH
Generation I battery which stores more than twice the energy of a lead-acid
battery for the same weight and volume. It also utilizes a second-generation
electric propulsion design that reduces cost and complexity while improving
performance and reliability. Typical of consumer electronic devices -- such as
personal computers and cell phones--technology advances and increasing sales
volumes result in lower costs. The second-generation electric drive system has
one-third fewer parts than the first generation at approximately one-half the
cost.
Ovonic Battery is preparing to introduce its Generation II design for the NiMH
battery later this year. This advanced design with its lower cost will further
help to make electric vehicles cost competitive with conventional
gasoline-powered vehicles. Ovonic Battery's business plan calls for significant
increases in energy and power with each next-generation NiMH battery, while at
the same time reducing cost. As noted earlier, ECD is firmly committed and is on
track to meet the auto industry's battery cost goal of $150 per kilowatt hour
established to assure the cost competitiveness of electric vehicles. For more
information about Ovonic Battery products and Ovonic NiMH technology, please
refer to our new Technology and Products brochure.
In February 1998, we joined forces with EV Global Motors (EVG), a light-electric
transportation company formed by former Chrysler Corporation chairman, Lee
Iacocca, to accelerate the development of electric vehicles for personal
transportation. Unique Mobility Corporation (UQM), a producer of electric motors
and controllers, also is part of our strategic alliances. Throughout the year,
ECD, EVG and UQM, working together, have explored several business opportunities
that are expected to result in business arrangements mutually beneficial to all
three companies.
<PAGE>
We are continuing to find new uses and applications for the NiMH battery,
especially with the larger EV and HEV battery types. To pursue these new
opportunities, and to strengthen our current customer relations, Mr. Alford
Harville, 46, was named senior director of marketing reporting to Ovonic Battery
president, Subhash K. Dhar. Al has considerable experience in the sales and
marketing of batteries, including lead acid, lithium and NiMH types, with
several major international battery manufacturers.
During the year we continued to work closely with our battery partners to
develop customers for the Ovonic NiMH battery. In Japan, our partner, Sanoh
Industrial Co. Ltd. (Sanoh), is working closely with Honda Motor Company, Ltd.
(Honda), on powerful "C" size cells for the Honda electric bicycle. Performance
and range tests have outperformed other batteries, and production manufacturing
has started.
In October 1998, Ovonic Battery entered into a cooperative venture agreement and
a patent license with Sanyo Electric Co. Ltd. (Sanyo) of Osaka, Japan. ECD is
pleased to be working with Sanyo, the world's largest manufacturer of NiMH
consumer batteries. This new agreement is an important step in our overall
strategy to expand volume applications for our advanced technology NiMH
batteries. Sanyo has been granted a nonexclusive patent license under Ovonic
Battery patents, which includes the right to sublicense Sanyo affiliates. Under
the terms of the strategic agreement, Sanyo has been authorized to manufacture
the following: (1) NiMH batteries for two- and three-wheel vehicles in Japan and
China for worldwide sale; (2) other-use large NiMH batteries in Japan; and (3)
NiMH batteries for four or more wheel OEM vehicles manufactured in Japan for
domestic and export sale. Sanyo also has purchased a minority common share
position, joining Honda and Sanoh as shareholders of Ovonic Battery.
Over the years, even before becoming a shareholder in Ovonic Battery, Honda has
closely followed the development of the Ovonic NiMH battery for electric
vehicles. We note with interest that Honda has selected Ovonic NiMH technology
for each of its electric vehicles: bicycle, EV Plus four-passenger electric car
and Honda VV, a two-passenger hybrid-electric vehicle. While Honda currently
uses a Japan-sourced NiMH battery for its cars, we soon will be presenting our
next-generation battery information to them showing the energy and power
improvement along with a cost reduction.
<PAGE>
ECD's New Board Members
We are very pleased that two outstanding individuals have agreed to serve on
the ECD Board of Directors -- Mr. Kenneth R. Baker and Mr. Tyler Lowrey.
Mr. Baker, 51, ECD vice chairman and chief operating officer, recently left
General Motors after a long career in which he held a range of senior positions,
most notably as vice president in charge of GM's Global Research and Development
activities. Most recently, he was vice president and general manager of GM's
Distributed Energy Business Unit (see page three of this letter). Mr. Baker has
held several important industry positions including chairman, Electric
Transportation Coalition; operating officer, USCAR/PNGV; and founding chairman,
USABC. He has been recognized as one of the "Top 25 R&D Leaders in the World" by
the A.D. Little Company. Mr. Baker serves on the Board of AeroVironment, Inc.,
the company which helped develop the EV1 electric vehicle.
Mr. Lowrey, 45, is an ECD vice president and the former vice chairman of Micron
Technology where he was for many years the company's chief technology officer.
He is a leading world authority on semiconductor memory technology. Mr. Lowrey
has more than 60 patents, more than 20 patents pending and numerous publications
in the field of memory microelectronics. As noted on page two of this letter,
Mr. Lowrey is president and CEO of the new joint venture company, "Nanovonics,
Inc.," formed to commercialize the Ovonic Unified Memory.
ECD's Financial Results and Assets
During the past year, ECD leveraged its financial position with strategic
investments in products and technology designed to improve our manufacturing
base and support our product development programs. These investments have
resulted in patents and proprietary know-how that have increased the intrinsic
value of the company, although Generally Accepted Accounting Principles require
that they be expensed.
As a result, our balance sheet does not reflect the value of our most important
assets. For example, ECD's patents -- as well as our 49.98 percent interest in
the United Solar joint venture (in which our joint venture partner has invested
more than $58 million) and our 40 percent interest in GM Ovonic -- are not
carried at any significant value on our balance sheet. Thus, it is important to
review such off balance sheet asset values in fundamental terms when assessing
the performance of ECD as it continues to develop its technologies and closes in
on commercialization and financial reward.
<PAGE>
Patents/Intellectual Property: 354 United States, 846 Foreign
Joint Ventures and Subsidiary:
United Solar Canon invested $58MM+ for its 49.98%
(49.98% owned by ECD) interest
GM Ovonic GM is investing $20 MM for its 60%
(40% owned by Ovonic Battery) interest
Sovlux KVANT & Minatom invested $15 MM+ for
(50% owned by ECD) their 50% interest
Ovonic Battery Company 20+ licensees
(91.4% owned by ECD) Sanyo, Sanoh and Honda each purchased
an interest in Ovonic Battery which
values the Ovonic Battery Company at
approximately $150MM
Capital Equipment: Replacement value is $15MM+
Tax Loss Carryforwards: $42 MM in reduction of future income
taxes
We are certain that our stockholders agree that these assets are of enormous
value and importance to the company. Despite their value not being recorded on
our balance sheet, these assets -- particularly the intellectual property assets
- -- greatly enhance our ability to execute a three-pronged commercialization
strategy consisting of:
- - Joint ventures and business alliances that enable ECD to dominate important
growth markets;
- - Licensing ECD products to provide a strong royalty stream; and,
- - Building our manufacturing base to bring to market materials, battery
electrodes, finished products and production equipment.
As a direct result of our investment strategy, we continue to make progress in
commercializing key enabling technologies for the energy and information
industries.
Year 2000 Compliance Program (Y2K)
Much has been written about the "Year 2000 Problem" and the potential
difficulties companies face if their information technology systems aren't
adequately upgraded. ECD has an extensive review program in place to ensure that
we're ready. In addition, we've requested assurances from each of our top 20
vendors and suppliers that they will be Y2K compliant by the second quarter of
1999. (For more information on this matter, see ECD's 1998 Annual Report on Form
10-K.)
<PAGE>
ECD Investor Relations
ECD has retained the counsel and services of an experienced outside company to
help increase the awareness of ECD and its products. We have begun a proactive
outreach program to the financial community, and over the next 12 months we
expect to meet with financial analysts and portfolio managers in the major
capital market centers in the U.S. Management has participated in a number of
media opportunities, and it will continue to do so in 1999 in an attempt to
raise awareness of ECD and its technology with the general public and investment
community.
In Closing
One of our long-serving directors, Mrs. Haru Reischauer, passed away on
September 23, 1998. She was an exceptional and gifted person. Haru and Edwin
Reischauer, a former ECD director and U.S. Ambassador to Japan, played a crucial
and historical role in fostering understanding and cultivating a positive
relationship between Japan and the United States. We will miss her greatly.
We have continued to make progress during this past year in the fields of
phase-change memories and switching, thin-film photovoltaics and nickel
metal-hydride batteries. These fields have led to the creation of new growth
industries based on our core products, thanks to the dedication and hard work of
our talented colleagues and employees. We appreciate the efforts and support of
our board of directors whose members contributed to our progress, and we thank
our stockholders for their support.
/s/ S.R. Ovshinsky /s/ Robert C. Stempel
- ----------------------------------- --------------------------------
S. R. Ovshinsky R. C. Stempel
President and Chief Executive Officer Chairman
February 1999
Stockholders are encouraged to read the Company's Annual Report on Form 10-K for
its fiscal year ended June 30, 1998 carefully, including the information
contained in the section Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act of 1995.
<PAGE>
Stanford R. Ovshinsky, President, Chief Executive Officer and Director, ECD;
Chief Executive Officer and Director, Ovonic Battery; President, Chief Executive
Officer and Director, United Solar Systems Corp.; Member, Board of Managers of
GM Ovonic L.L.C.; Co-Chairman of the Board of Directors, Sovlux; Chairman, ECD's
new electronic memory joint venture
Robert C. Stempel, Chairman of the Board and Executive Director, ECD; Chairman,
Ovonic Battery; Member, Board of Managers of GM Ovonic L.L.C.; former Chairman
and Chief Executive Officer, General Motors Corp.
Kenneth R. Baker, Vice Chairman, Chief Operating Officer and Director, ECD;
former Vice-President, General Motors Corp. and General Manager of GM
Distributed Energy Business Unit
Iris M. Ovshinsky, Ph.D., Vice President and Director, ECD; Director and
Secretary, Ovonic Battery
Nancy M. Bacon, Senior Vice President and Director, ECD; Director, United Solar
Systems Corp.; Director, Sovlux
Umberto Colombo, Ph.D., Director, ECD; Chairman of the Scientific Councils of
the ENI Enrico Mattei Foundation and of the Instituto Per l'Ambiente, Italy;
former Chairman of ENEA (Italian National Agency for New Technology, Energy and
Environment)
Hellmut Fritzsche, Ph.D., Vice President and Director, ECD; retired Professor
of Physics and former Chairman of the Department of Physics, The University of
Chicago
Joichi Ito, Director, ECD; President of Digital Garage KK and Transoceanic
Ventures, Inc., Japan; board member PSINet Japan KK
Seymour Liebman, Director, ECD; Director, United Solar Systems Corp.; Executive
Vice President and General Counsel, Canon U.S.A., Inc.
Tyler Lowrey, Vice President and Director, ECD; President and Chief Executive
Officer, ECD's new electronic memory joint venture; former Vice Chairman of
Micron Technology, Inc., Boise, Idaho
Walter J. McCarthy, Jr., Director, ECD; retired Chairman and Chief Executive
Officer of Detroit Edison, Detroit, Michigan
Florence I. Metz, Ph.D., Director, ECD; Director, Ovonic Battery; retired
Project Manager for Business and Strategic Planning, Inland Steel, East Chicago,
Indiana
Nathan J. Robfogel, Director, ECD; Vice President for University Relations,
Rochester Institute of Technology, Rochester, New York; retired Partner,
Harter, Secrest & Emery, Rochester, New York
Stanley K. Stynes, Ph.D., Director, ECD; retired Professor and former Dean,
College of Engineering, Wayne State University, Detroit, Michigan
Subhash K. Dhar, President, Chief Operating Officer and Director, Ovonic Battery
<PAGE>
Marvin S. Siskind, Vice President and Patent Counsel, ECD
Ghazaleh Koefod, Secretary, ECD
Roger John Lesinski, General Counsel, ECD
Stephan W. Zumsteg, Treasurer, ECD
Outside Legal Counsel Auditors
Jenner & Block Deloitte & Touche LLP
Chicago, Illinois Detroit, Michigan
Outside Patent Counsel Transfer Agent
Lawrence G. Norris EquiServe as servicing agent for
Bonsall, California State Street Bank & Trust Company
P.O. Box 8200
Boston, Massachusetts 02266-8200
800.257.1770
ECVCM-LS-98
<PAGE>
(Front Cover)
ENERGY CONVERSION DEVICES, INC.
Technology and Products based on Amorphous and Disordered Materials
Pictures of a silicon wafer with patterning, the flexible thin-film photovoltaic
roofing shingles, and of traffic on a highway.
<PAGE>
(Flap to Front Cover)
OVONIC
Pictures of:
Phase-change optical and electronic memories
Flexible thin-film photovoltaic products
Nickel metal-hydride batteries
Specialized manufacturing equipment
<PAGE>
(Flap to Inside Front Cover)
ALONG THE WAY
ECD Founded in 1960
Energy Conversion Laboratories
Incorporated July 12, 1961, in the State of New York
Located at 14121 West McNichols, Detroit, Michigan
Pictures of miscellaneous products in connection with
the Company's technologies:
1960s--Information
The Switch That Started It All
Evolution of amorphous semiconductor memories
1960s--Energy
From the beginning: solar, hydrogen and amorphous and disordered materials
1970s
Materials to Products
Part of the early business plan -- the end products from ECD's inventions
Imaging films
Amorphous solar cell is flexible and adaptable
1980s
(Right) Sovonics Ultralight(TM) solar modules
(Below) Strip of Sovonics shingles that can be easily installed on roofs,
providing enough energy to supply electricity to homes and commercial
installations
1982
Ovonic Battery Company founded
1980s
Ovonic consumer NiMH batteries
1985
Optical phase-change memory
First commercial use of Ovonic phase-change optical recording technology
<PAGE>
(Inside Cover)
Pictures of miscellaneous products in connection with
the Company's technologies:
1990
ECD and Canon form United Solar
Ovonic EV and industrial NiMH cells
1992
ECD awarded the first USABC contract to develop EV batteries
1993
First application of Ovonic EV NiMH battery pack in Chrysler TE van
1994
GM Ovonic formed to manufacture NiMH EV batteries
1996
Four-passenger car with Ovonic NiMH batteries wins Tour de Sol Race -- 373 miles
on a single charge
1996
United Solar opens 5 MW photovoltaic manufacturing plant
1997
Four-passenger car equipped with Ovonic NiMH batteries drives from Boston to New
York City--216 miles--on a single charge
1997
Family of Ovonic Batteries introduced
1997
Industry recognizes ECD phase-change technology
1998
United Solar ultralight photovoltaic material is installed on the MIR space
station
1998
First GM Ovonic NiMH batteries are installed in EV1 electric vehicles for lease
customers
UNI-SOLAR(R) products covered by 20-year warranty
1999
High data density electronic memory using multi-bit storage
Time Magazine featured Stanford R. Ovshinsky as a "Hero for the Planet"
<PAGE>
(Page 1)
Welcome to Energy Conversion Devices.
This brochure will acquaint you with ECD's wide array of innovative technologies
and products. We are a global company and a world leader in the development of
amorphous and disordered materials. Our extensive and dominating patent
portfolio consists of 354 issued U.S. patents and 846 foreign counterparts in
three core product areas:
- - Information technology, data storage & switches (phase-change optical and
electronic memories)
- - Energy generation (flexible, thin-film photovoltaic products)
- - Energy storage (nickel metal-hydride batteries and other hydrogen-storage
devices)
The following pages will explain technologies originated at ECD and their
advantages; describe the many products made possible by these enabling
technologies; and introduce the ECD team, the people who make it happen.
/s/S.R. Ovshinsky /s/Iris M. Ovshinsky
- --------------------------------- ------------------------------------
Stanford R. Ovshinsky Iris M. Ovshinsky
President and CEO Vice President
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Products and Technologies
INFORMATION TECHNOLOGIES
Optical Memory Materials
Manufacturing and Sales
Licensees:
- - Sony
- - TDK Corp.
- - Teijin
- - Matsushita
- - Hitachi
- - Plasmon
- - Toray
- - Toshiba
- - IBM
- - Asahi Chemical
- - Polaroid
- - ITRI
- - Others in negotiation
Products and Major Markets
- - CD-RW optical disks
- - DVD-RAM and DVD-RW optical disks
- - PD optical disks
Patents: 15 U.S. and 58 foreign
Microelectronics
Nanovonics, Inc., joint venture with Tyler Lowrey to commercialize Ovonic
thin-film, nonvolatile semiconductor memory and logic devices:
- - Ovonic Unified Memory to replace DRAM, SRAM and Flash EEPROM
- - Neural networks
- - Thin-film logic
- - Thin-film AMLCD pixel addressing
Patents: 28 U.S. and 101 foreign
ENERGY GENERATION
Photovoltaics
Manufacturing and Sales
Joint ventures:
- - United Solar (with Canon Inc.)
- - Sovlux (Kvant and Minatom in Russia)
Licensee:
- - Canon
Products and Major Markets
- - Solar roofing--solar shingles and metal roofing
- - Remote power for developing nations
- - Battery charging--marine applications and portable electronics
- - Telecommunications and space applications
- - Stand-by power
- - Grid-connected distributed power
- - Centralized (utility) power generation
Inventors of roll-to-roll continuous-web, triple-junction manufacturing
technology.
Patents: 165 U.S. and 622 foreign
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ENERGY STORAGE
Nickel Metal-Hydride Batteries
Manufacturing and Sales
Ovonic Battery Company, an ECD subsidiary, is responsible for formation of
strategic alliances, battery packs, materials development and electrode
manufacturing.
Joint ventures:
- - GM Ovonic (EV and HEV batteries)
- - Sovlux (all batteries)
Licensees for portable electronics batteries:
- - Hitachi-Maxell
- - Harding Energy
- - Canon
- - LG Chemical
- - Walsin
- - Furukawa
- - Varta
- - Samsung
- - Matsushita/Panasonic (limited license)
- - GP Batteries
- - Eveready
- - Japan Storage
- - Three other major Japanese manufacturers
Licensees for EV and HEV batteries:
- - GM Ovonic
- - Sanoh (HEVs in Japan)
- - Sanyo (limited to Japan)
- - Saft
- - Nan Ya Plastics
- - Walsin
- - Hyundai
Products and Major Markets
- - Portable electronics
- - Electric scooters and bicycles
- - Electric vehicles (EVs)
- - Hybrid electric vehicles (HEVs)
- - Lawn and garden products
- - Various other industrial, commercial and residential applications
- - Backup power
- - Telecommunications
- - Utility storage
Patents: 53 U.S. and 233 foreign
MACHINE AND MANUFACTURING TECHNOLOGY
Design and fabricate production equipment, pilot production lines, R&D
equipment, coating machinery and hydride storage containers for in-house use,
commercial customers, licensees, joint ventures (United Solar and GM Ovonic) and
other strategic partners.
Patents: 68 U.S. and 179 foreign
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OVERVIEW
New Industries Through New Materials
Energy Conversion Devices, Inc. (ECD), is a publicly-held company (NASDAQ:ENER).
It was founded by Stanford R. Ovshinsky and Dr. Iris M. Ovshinsky as an
outgrowth of Mr. Ovshinsky's pioneering work in the science and technology of
amorphous and disordered materials.
The company's mission is to develop new industries based on new synthetic
materials, products and production processes that can meet society's need for
(1) clean, renewable energy and (2) better ways to store and process
information.
Over the years, ECD has developed a broad body of basic materials knowledge and
process know-how. Its extensive patent portfolio of more than 350 U.S. patents
and more than 800 corresponding foreign patents--including many fundamental
patents--covers a wide range of materials, devices, products and production
processes. These intellectual property assets put ECD in a controlling position
in its chosen field and form the basis for the global strategic alliances that
the company forms to commercialize its diverse technologies.
Today, ECD and its network of business partners and licensees are manufacturing
cutting-edge products in three rapidly-growing global markets: information
technology, energy generation and energy storage. ECD designs and builds
manufacturing machinery that incorporates its proprietary production processes;
maintains ongoing research and development programs to continually improve its
products; and develops new applications for its technologies.
Picture of the Central Analytical Lab.
(Caption:)
ECD's well-equipped Central Analytical Laboratory characterizes proprietary new
materials resulting from the company's product development activities
Map of the world
(Caption:)
ECD has a worldwide business strategy
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INFORMATION TECHNOLOGY
New Materials Enabling Advanced Data Storage Products
ECD has developed a number of key technologies in the field of information
processing. The company has developed products for data input (image scanners),
data output (copier and laser printer drums), data display (active-matrix
flat-panel displays), and data storage (optical and electronic memory devices).
Current activity is focused on data storage technologies.
Optical Memory
ECD originated phase-change erasable (PCE) high-data capacity optical memory
technology and holds the basic patents in the field. PCE optical memory uses a
laser to write and erase digital data on a thin film of amorphous semiconductor
alloy that has been deposited onto a substrate disk. The disk- and data-reading
processes are similar to those used for an ordinary CD or CD-ROM, with the
significant difference that the PCE optical memory disk can be erased and
rewritten up to a million times. ECD has established optical memory license
agreements with 12 companies, and it is negotiating with the remaining few
companies that are manufacturing phase-change optical memory products.
Licensed products are available in a number of different formats and form
factors. For example, a number of ECD licensees are producing a 650-megabyte
optical memory product called Phase Change Dual (PD). PD disk drives can play
prerecorded CD-ROM disks as well as write, read and rewrite data on removable
PD disks. In 1998, another group of ECD licensees introduced a similar
rewritable product called CD-RW.
The market for these products is growing rapidly. However, the most promising
applications of ECD's optical memory technology are only now emerging. A
"convergence" of the information processing, communication and entertainment
industries is taking place as a result of advances in digital electronics. This
convergence is bringing about revolutionary changes in the way we communicate,
do business, educate and entertain ourselves. Digital technology is rapidly
replacing analog technologies in telephones, cameras, television and other data
recording, transmission and storage applications.
One new convergence product is the rewritable digital versatile disk (DVD),
which stores more than four times the data of CD-ROMs. Playback-only DVDs and
drives have been commercially available since 1997, and ECD's high-capacity
phase-change optical memory technology has emerged as the technology of choice
for rewritable DVDs, which were introduced in 1998.
Picture of Phase Chase Dual Drive
(Caption:)
Phase-change dual (PD) drives play back prerecorded CDs and CD-ROMs and record
onto erasable data disks using ECD's optical memory technology
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Optional Memory Disk Technologies (Chart)
<TABLE>
<CAPTION>
Disk Type Storage Type Read Compatibility Capacity Technology
<S> <C> <C> <C> <C>
CD Read-only (audio) 650MB (74 min.)
CD-ROM Read-only CD, Photo CD, CD-R, CD-RW (after 1997) 650MB
DVD-ROM Read-only CD, CD-ROM, DVD, Photo CD, CD-R, 4.7GB
PD, CD-RW, DVD-RAM
DVD Read-only (video) 4.7GB (2 hrs.)
Photo CD Write-once (images) (no separate drive) 650MB (100 images)
CD-R Write-once CD, CD-ROM, Photo CD 650MB
PD Phase-change Rewritable CD, CD-ROM, Photo CD, CD-R 650MB ECD
CD-RW Phase-change Rewritable CD, CD-ROM, CD-R, Photo CD 650MB ECD
DVD-RAM Phase-change Rewritable CD, CD-ROM, DVD, Photo CD, CD-R 2.7GB ECD
PD, CD-RW, DVD-ROM
DVD-RW Phase-change Rewritable CD, CD-ROM, DVD, Photo CD, CD-R 3.0GB ECD
PD, CD-RW, DVD-ROM
</TABLE>
(Caption:)
ECD's phase-change technology is used in all of the rewritable products shown
Rewritable DVDs can be used (and reused) for multi-media presentations, mass
data storage, electronic games, downloading from the Internet, recording
full-length high-resolution movies and other programs from digital television,
and other applications.
Analysts predict that DVD will be the most significant consumer electronics
technology to be introduced in the 20th century because eventually it will
replace videotape and provide a single device for high-capacity digital data
storage. Industry forecasters project that DVDs for consumer electronics and
computer storage will grow in the near-term to a $2 billion industry. There are
additional large markets for these products in the photographic and
medical-records industries for storing X-rays and other medical information.
The large number of DVD manufacturers that currently are licensed to use ECD
technology and those seeking licenses are expected to produce a steady growth
in royalties to ECD.
ECD also is working on several development programs under the auspices of the
U.S. Department of Commerce's Advanced Technology Program. These projects are
designed to increase the performance and lower the costs of DVDs as well as
develop very high-data capacity optical tape--all of which can lead to
additional applications of ECD technology.
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Ovonic Unified Memory
All ECD phase-change memory devices use proprietary multi-element chalcogenide
alloys that can exist in stable amorphous and crystalline atomic structural
phases as well as in a range of "intermediate" structural states. The structural
state of the alloy is changed by applying an energy pulse and is subsequently
interrogated to read the stored information. In the Ovonic optical memory, a
laser applies an energy pulse, and the resulting change in structure changes the
material's reflectivity. The Ovonic Unified Memory (OUM) uses an electrical
pulse to cause the phase change, and the change in resistance is read as stored
information. The structural changes are nonvolatile, and information can be
continuously written and rewritten.
ECD has formed a joint venture company, Nanovonics, Inc., with Mr. Tyler Lowrey,
the former vice chairman and chief technology officer of Micron Technology,
Inc., Boise, Idaho, to commercialize OUM. The joint venture has device
manufacturing capability and also will license selected applications of this
technology.
OUM uses a very simple, two-terminal, thin-film structure. The structural state
of the thin film is changed by applying an electric pulse and is interrogated by
a simple, non-destructive measurement of its two-terminal resistance.
Proprietary chalcogenide alloy thin-film products now under development display
very high performance characteristics that can provide the basis for a family of
advanced semiconductor memory devices. They are expected to have price and
performance characteristics that are not possible with conventional
semiconductor technologies, and they can open up profitable new fields of use
for electronic memories.
For example, the more than $25 billion market for high-speed computer system
memory currently is served by conventional DRAM devices that use CMOS technology
developed more than 30 years ago. Essentially all digital devices--desktop and
portable computers, facsimile machines, printers, cellular phones and video
games--use DRAM. New products, including emerging digital telephone systems, are
expected to drive a rapid growth in demand.
ECD's proprietary OUM can functionally replace conventional DRAM with
significant reductions in manufacturing cost while adding important new features
such as nonvolatile data storage. The combination of lower cost and greatly
enhanced functionality in a proprietary new semiconductor memory device presents
an unexcelled commercial opportunity for semiconductor device manufacturers.
(Chart)
Multiple Bit Storage in One Memory Cell
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OUM also can be used to replace conventional Flash EEPROM-type devices that
currently are used in a range of applications that includes removable
solid-state memory cards for electronic cameras, computer modems and computer
system boards. ECD's devices offer vastly increased programming life and
significantly faster programming time.
Further development of these devices could yield a single device that is
designed to replace DRAM, SRAM and computer hard drives. This would permit a
radical redesign and simplification of computer architecture by eliminating the
use of multiple tiers of memory. By removing the distinction between archival
storage and system memory, computer code can be stored in a nonvolatile fashion
and "executed in place," thereby improving computer performance and lowering
costs. The technology also would allow fabrication of inter-connected,
three-dimensional, multi-layer arrays to construct complex and very dense
neural/synaptic networks.
Demonstrated Ovonic Unified Memory
Cell Performance Characteristics
- - Long programming life (more than 1013 cycles)
- - High speed (1 ns pulses)
- - Multi-bit data storage (can reliably store 16 discrete resistance levels)
- - Low-voltage operation pulses of less than 5 volts
- - Compatibility with conventional silicon device processing
(Call-out:)
Industry recognizes leading role of
ECD's phase-change technology
(Call-out:)
Ovonic Unified Memory combines all the advantages of DRAM, SRAM and Flash EEPROM
in a single low-cost device
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ENERGY GENERATION
Photovoltaics (PV) is the direct conversion of sunlight into electricity. It
holds the key to solving the world's energy problems by using nondepletable and
nonpolluting energy from the sun. Since the 1970s, ECD's Solar Energy Division
has developed the materials and technology essential to allow a shift to the
widespread use of solar energy, thereby making PV viable for large-scale
terrestrial applications.
The Formation of United Solar
In 1990, two well-known high technology companies--ECD, the pioneer and leader
in the field of amorphous and disordered materials, and Canon Inc., a preeminent
manufacturer of business machines, photographic products and optical
systems--formed a joint venture to exploit ECD's PV technology. The joint
venture company, United Solar Systems Corp. (United Solar), has become the world
leader in thin-film PV, and its products are marketed under the Uni-Solar(R)
brand name.
United Solar was the culmination of a long-standing relationship between ECD
Canon. The two partners began working together in 1986 to develop a low-cost,
high-performance copier drum based on ECD's amorphous materials and deposition
technology.
Canon's corporate commitment to environmental awareness and its desire to enter
an emerging new field with great potential coincided with ECD's development of
its proprietary amorphous silicon-based thin-film PV technology, with its unique
characteristics and very low cost potential. United Solar was established as a
U.S. company with the vision of becoming the world's preeminent PV company,
bringing together the strengths of both parent organizations in a unique synergy
of technology, manufacturing expertise and worldwide sales experience.
ECD, and later ECD/United Solar, achieved world records for efficiency in
amorphous silicon solar cells. Uni-Solar products--unique lightweight, flexible,
unbreakable solar panels that have proven themselves in a wide range of
applications worldwide--were designed, perfected and brought to the marketplace.
Uni-Solar products now include a complete line of rigid power panels for
stationary applications; a line of flexible solar panels for recreational use
and battery charging--the only such panels on the market; and a new line of
roofing products that will have a dramatic impact on the generation of
electricity worldwide.
United Solar is poised today to enhance its leadership in the thin-film solar
industry. A new five megawatt solar cell production line is operating at its
Troy, Michigan, plant. United Solar also has a new 60,000 square-foot facility
in Tijuana, Mexico, where final assembly of its solar modules is done. To meet
future demands in the rapidly-growing PV market, United Solar is planning its
next expansion. The construction of a 25 to 100 megawatt facility will be the
company's next step to reach its goal of making PV economically competitive with
fossil fuels in the production of electric power.
Pictures of United Solar Systems Corp.
(Caption:)
United Solar headquarters in Troy, Michigan
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PV--Past, Present and Future
The role of PV as an energy source has evolved over several decades. From its
initial, small-scale use to generate energy for space applications, solar cell
arrays have become a practical necessity for most satellites, for which they
provide reliable service over extended periods of time.
Continuous technological developments and lower costs also have led to a variety
of terrestrial applications for PV, primarily where access to conventional
electric power is either impossible or impractical. As costs decrease and
building with our roofing products increases, additional uses for PV emerge.
Today PV provides power in a wide variety of applications including small
lighting systems and electrification of entire villages. In between is a
diversity of applications that address telecommunications, health, safety,
recreation, national security, agriculture and other remote power needs.
These applications have resulted in steady growth in the PV industry--now at 25
percent annually worldwide--with 1998 world shipments at 160 megawatts. This
growth will continue as remote applications and niche markets expand and PV
prices continue to decline.
However, these uses represent only a small portion of the market potential for
PV. There are huge markets to be addressed in the large-scale generation and
distribution of electricity. This is one of the world's largest businesses--with
annual revenues estimated at more than $800 billion-- roughly twice the size of
the worldwide automobile industry. Moreover, energy forecasters are predicting
enormous growth during the next few decades and revenues in the trillions of
dollars.
According to the Energy Information Administration of the U.S. Department of
Energy, the world's annual consumption of electricity is expected to rise from
12 trillion kilowatt hours in 1995 to 23 trillion kilowatt hours in 2020. The
greatest increases are expected in developing countries in Asia and in Central
and South America. Distributed power is the most desirable mode for the
electrical infrastructure in many developing nations because it permits them to
avoid spending billions of dollars to build central power stations that store,
transmit and distribute electricity. PV systems are an attractive alternative.
While the rate of growth in industrial nations will be slower, demand
nevertheless will be substantial. For example, new electrical generating
capacity required by U.S. utilities alone to meet growing demand and to replace
retiring units is estimated at 363 gigawatts by 2020.
PV is now addressing the huge residential, commercial and industrial markets as
its price comes down and its many benefits become more widely known. The
consensus among PV market forecasters is that penetration of these markets will
be explosive when PV system prices decline to less than $3/watt, a price at
which PV will be able to compete on a purely economic basis with coal, gas and
oil. Module manufacturing costs will have to drop to $1/watt, which United Solar
will achieve as it moves into high-volume production.
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ECD/United Solar's Unique PV Technology
From the beginning, ECD/United Solar's PV technology was designed for
high-volume, low-cost production in order to be economically competitive with
fossil fuels as a major source of energy worldwide. This goal has required the
invention of new PV materials, device designs and production processes.
For PV to be able to compete in the global utility and distributed power
markets, its module manufacturing costs must be less than $1/watt. Crystalline
silicon technology, the PV industry's workhorse for many years, requires
fabricating solar cells from single-crystal or polycrystalline silicon
semiconductor materials. Producing this type of solar cell requires growing a
solid crystal--which is an expensive and energy-intensive process--slicing it
and processing the cells into modules. Cost-reduction efforts for this
technology have reached a plateau, and it is generally conceded that the high
materials cost and multiple processing steps needed to manufacture these types
of modules will prevent this technology from breaking the $1/watt barrier.
Photovoltaic Applications
Communications
- - Telecommunications
- - Fiber optic repeaters
- - Extended backup power
- - Satellites
Energy--Electric
- - Control and monitoring (e.g., sectionalizing switches)
- - Service alternative to lightly-B50 loaded lines
- - Billboards and signs
- - Remote homes and cabins
- - Distribution/generation support
- - Building-integrated PV
- - Homes, buildings and utilities
Energy--Oil and Gas
- - Control and monitoring
- - Cathodic protection for pipelines and platforms
Transportation
- - Navigational aids
- - Communication (e.g., roadside phones)
- - Construction signs
- - Directional and safety signs Traffic control and monitoring
- - Cathodic protection of bridges, etc.
Agriculture
- - Water pumps
- - Electric fences
- - Irrigation control
- - Advanced monitors
Security/Safety (Crime Prevention)
- - School crossing lights
- - Lights for bus shelters
- - Pathway lighting
- - Emergency phones
National Security
- - Remote facility power
- - Portable power systems
- - Portable power for soldiers
- - Remote sensors and robotics
- - Vehicle battery maintenance
Disaster Mitigation and Relief--Emergency Power
- - Communications
- - Water pumping and disinfection
- - Power for clinics, kitchens and shelters
- - Area lighting
Environment
- - Resource and weather monitoring
- - Parks and recreation areas
- - Riparian management
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ECD/United Solar developed its proprietary solar cell technology for large-scale
production of solar electric energy by addressing three key requirements:
- - Low materials cost
- - High energy conversion efficiency with good stability
- - Low-cost, high-yield production process
Low Materials Costs
United Solar uses thin-film, vapor-deposited amorphous silicon alloy materials
instead of crystalline semiconductors to make solar cells. The amorphous silicon
alloy absorbs light more efficiently than its crystalline counterpart, so the
amorphous silicon solar cells can be 50 to 100 times thinner, a factor that
significantly reduces materials costs. Thin-film deposition also requires far
less energy than is needed to produce crystalline solar cells, which reduces
costs even further. In fact, it takes seven years for a crystalline solar cell
to produce the energy that was required for its production, while United Solar's
amorphous silicon alloy cells have a 1.5 year energy payback.
High Energy Conversion Efficiency With Good Stability
One of the most important measures of solar cell performance--and a major factor
in the cost of solar electricity--is the efficiency with which the cell converts
sunlight to electricity. The higher the efficiency, the lower the cost of
electricity produced. Commercial crystalline solar cells are generally between
10 and 12 percent efficient.
During its early stages, amorphous silicon alloy solar technology had a lower
conversion efficiency and a tendency to degrade under prolonged exposure to
sunlight. ECD/United Solar addressed both of these problems by developing a thin
(less than 1 micron) multi-junction device composed of nine intrinsic layers
(three sub-cells) that--for the highest efficiency and improved
stability--absorb the different color photons of the solar spectrum.
ECD/United Solar holds the energy efficiency records for all relevant amorphous
silicon solar cell structures. In 1994, the company achieved a new world record
of 10.2 percent stabilized light-to-energy conversion efficiency for a
large-area amorphous silicon alloy module. According to the U.S. Department of
Energy, which announced the breakthrough, "realizing the 10 percent performance
milestone means that thin-film PV with its promise of low-cost production moves
into commercial reality."
(Drawing)
Solar Cell
(Caption:)
The ECD/United Solar triple-junction cell uses three thin-film sub-cells that
convert the red, green and blue portions of the solar spectrum to attain higher
efficiencies
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In 1997, United Solar set another world record by achieving 13 percent
stabilized light-to-energy conversion efficiency for a small area device,
thereby breaking its own record in the field. Work at ECD and United Solar
laboratories will lead to continued improvements in energy efficiency.
Low Cost, High Yield Production Process
ECD also pioneered development of a revolutionary, proprietary, continuous
roll-to-roll solar cell deposition process, which is analogous to the low-cost
production process used for other large surface area products such as
photographic film and newsprint. Using a roll of stainless steel that is
typically a half-mile long and 14 inches wide, nine thin-film layers of
amorphous silicon alloy are deposited in a continuous, sequential manner in an
automated machine to produce a three-cell structure. Minimal downtime as a
result of planned maintenance and high yield from this process further increase
production efficiency. The roll of solar cell material then is processed for use
in a variety of PV products. The roll-to-roll production process offers
significant economy-of-scale advantages and results in dramatic cost savings as
production volume increases. This proprietary production process is key to
making PV cost-competitive with fossil fuels. ECD has been building roll-to-roll
PV deposition equipment since 1982, and United Solar's newest line is the
seventh generation machine built by ECD.
In summary, all three factors required to make PV economically viable are
successfully addressed by United Solar technology. Economies of scale that are
realized through more efficient use of materials, automation of the module
assembly process and high-volume production of PV modules (75 to 100 MW
annually) will bring the fully-loaded cost of PV module production down to less
than $1/watt.
ECD/United Solar Patent Position
ECD and United Solar have established a dominant patent portfolio in the field
of thin-film, amorphous silicon photovoltaics. Together, they own 165 U.S. and
622 corresponding foreign patents that cover all aspects of their PV technology.
Specific patents cover the fundamental materials from which PV devices are
fabricated; the design of the multi-junction, spectrum-splitting PV cells; the
specific processes for optimizing the fabrication of those PV cells; and the
equipment for producing the cells in a continuous roll-to-roll process.
(Picture)
(Caption:)
United Solar 5MW roll-to-roll solar cell production line built by ECD
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An Overview of United Solar Products
ECD/United Solar technology is uniquely able to use different substrate
materials to produce a variety of products. Current United Solar products use a
5-mil thick stainless steel substrate and are encapsulated in Tefzel(TM)
and other weather-resistant polymers. ECD/United Solar also is developing
technology for ultralight, ultra-thin solar cells to address a growing market
segment.
United Solar's triple-junction technology received an R&D 100 Award from R&D
Magazine recognizing it as one of 1998's most significant advances. All United
Solar products are free of breakable glass, and, of course, their thin-film
cells will not fracture as crystalline cells can. United Solar products are
lightweight, rugged and flexible--all unique characteristics among solar
products. These products also incorporate bypass diodes across each cell, which
permits the modules to produce power even when they are partially shaded.
(Chart)
United Solar Triple-Junction Solar Cell Performs Well In Shaded Conditions
(Drawing:) Triple Solar Cell
(Caption:)
Triple-junction spectrum splitting amorphous silicon alloy solar cell less than
1/50th the thickness of a human hair
(Call-out:) Thin-film photovoltaics are economically viable
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Uni-Solar Flexible Solar Chargers
United Solar has a line of flexible, portable battery chargers that have many
uses, particularly in marine and other outdoor environments. These chargers can
be stowed easily beneath seat cushions or inside lockers. When placed on an
automobile or recreational vehicle dashboard, they can be used to keep batteries
in top working condition. And, unlike other portable battery chargers, they
continue to operate even when they are partially covered by shadows created by
rigging, antennas or trees.
Uni-Solar Rigid Power Modules
United Solar also offers a line of rigid power modules that can be used
individually or in any size array for stationary power applications. They are
composed of an anodized aluminum frame and galvanized steel back plate that
provide stiffness to United Solar's flexible solar cells. A weather-resistant
junction box completes the module, which is covered by a 20-year warranty.
These rugged, unbreakable power modules are the building blocks of both large
and small power systems. Some individual modules are packaged with efficient
compact fluorescent lights, a controller and other hardware into the popular
Uni-Kit(TM), a small home-lighting system that is easily transported into remote
locations. The power modules also can be assembled into arrays in a variety of
sizes to meet residential or commercial power needs.
(Picture)
(Caption:)
Uni-Solar flexible solar chargers and rigid power module
(Picture)
(Caption:)
Mexican woman carries the future to her mountain village--her child and a
Uni-Solar self-contained lighting system on her back
(Picture)
(Caption:)
Four kW array constructed of Uni-Solar power modules
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(Page 15)
Uni-Solar Roofing Products
United Solar has introduced an exciting new line of solar-electric roofing
products to meet the expanding global need for electric power. Whether they are
used in a remote installation far from the electric-power grid, or to upgrade an
existing utility service, or to provide an environmentally-friendly and
economically-competitive alternative to grid-supplied electricity, Uni-Solar
roofing products will have a major impact on the industry. They address key
concerns--cost, ease of installation and aesthetic about using rooftop or
building-integrated PV.
Most residential buildings use rooftop shingles, which are reliable,
cost-effective and attractive. United Solar worked with a leading shingle
manufacturer to design a solar product that looks and functions like a
conventional shingle but has the added advantage of generating electricity.
United Solar's shingle can be laid out and nailed to the roof, just like its
conventional counterpart.
In November 1996, United Solar's flexible solar shingle received the Popular
Science 1996 "Best of What's New" Grand Award in the Environmental Technology
category. The shingle was honored in June 1997 by Discover magazine for being
the best innovation among the thousands that were entered in the Environment
category. U.S. Secretary of Energy, Federico Pena, commented that, "There is a
tremendous international competition in the development of roof-integrated solar
panels, and DOE is proud to be associated with this cutting-edge technology to
maintain the U.S. lead in the world."
United Solar also markets an architectural standing seam metal roofing product.
Flexible solar cells are laminated directly onto metal roofing panels that
measure up to 24 feet in length. The solar panels closely match the appearance
of standard metal roofing units, which preserves a consistent, attractive
appearance.
(Picture)
(Caption:)
Uni-Solar shingle array installed on the Southface Energy Center in
Atlanta, Georgia
(Picture)
(Caption:)
New Uni-Solar solar electric shingle
<PAGE>
(Page 16)
The first use of this product was a 1.5 kW DC roofing system installed on a
National Association of Home Builders (NAHB) 21st Century Townhouse. After
receiving a few minutes of simple instruction, the roofers who installed the
system reported that they were able to install the 18 PV panels in approximately
the same time they would need for a conventional metal roof. The grid-connected
system and its 16 kW battery backup provide power to the townhouses in the NAHB
Home Park, which features alternative construction and advanced energy-efficient
materials and systems.
Uni-Solar structural standing seam solar electric roofing products round out the
company's roofing products line. Pictured above right is a 10 kW AC array that
shades U.S. Army vehicles from the blazing sun of the Yuma Proving Ground in
Arizona while producing needed electricity. The array reduces the mid-day peak
power consumption at the site. Since conventional shaded parking in Arizona
costs approximately $5/sq. ft., the cost of the solar electric system is
effectively reduced. This type of system is of particular interest to the Army
to help meet its need for off-grid, remote-site power in high-temperature
climates. The Yuma site demonstrates the durability of Uni-Solar roofing panels
in an environment where ambient temperatures can soar to 120 degrees F (49
degrees C) in the summer, and where the array temperature approaches 167 degrees
F (75 degrees C).
(Picture)
(Caption:)
Installing Uni-Solar metal roofing
(Picture)
(Caption:)
1.5 kW metal-roofing system on an NAHB house
(Picture)
(Caption:)
PV-covered parking at the U.S. Army's Yuma Proving Ground
<PAGE>
(Page 17)
Uni-Solar Portable Solar Chargers
United Solar modules can be packaged for many specialty applications. The
company's portable solar charger (photo below) is designed to be carried into
remote areas for field communications, emergency power and battery maintenance.
Semi-finished PV modules are connected in series/parallel and sewn into tough
nylon fabric that can be folded compactly. The charger is abuse-tolerant,
functional in partial shade, lightweight and easy to transport so that it can
provide power for the military, hikers, climbers and photographers.
Space PV Products
United Solar's thin-film amorphous silicon alloy solar panels also are useful
for space telecommunication applications. For many years, satellites have used
crystalline silicon or gallium arsenide solar cells to generate power, but these
cells are expensive, fragile and significantly heavier than United Solar's
thin-film cells.
There is a growing need for low-cost and lightweight solar cells for the large
number of satellites that will be launched during the next five years to
facilitate faster global access to telephones, Internet and video phones. United
Solar has been evaluating its technology to address this huge market.
NASA has confirmed that the total area efficiency of United Solar's cells is 12
percent under AM0 solar illumination present in space. United Solar has
demonstrated the radiation hardness and superior high temperature properties of
its cells, which are able to retain more power than conventional crystalline
cells under operating conditions prevalent in space. The cells also have gone
through thousands of thermal cycles under space conditions. United Solar modules
currently are being tested on the MIR Space Station, where they are
demonstrating reliable space performance without any degradation.
United Solar lightweight products from the company's current production
machinery have demonstrated significant cost savings for groups that launch
satellites. The use of the low-cost technology permits United Solar to price the
products lower than conventional products. We are developing an ultralight
technology that incorporates our solar cells deposited on polymer in order to
further increase specific power density.
United Solar has been approached by several space companies that recognize the
need for low-cost PV for use in a constellation of satellites and other space
platforms that will be launched during the next five years. We believe that
amorphous silicon alloys and related materials are the enabling technology for
these applications, and United Solar is the leader in this field.
(Picture)
(Caption:)
Uni-Solar portable solar charger
<PAGE>
(Page 18)
ENERGY STORAGE
Ovonic Nickel Metal-Hydride Batteries
ECD's approach to energy systems has both generation and storage components. The
company developed its photovoltaic technology to generate energy and the Ovonic
nickel metal-hydride (NiMH) rechargeable battery to store it. Like its PV
technology, the proprietary Ovonic NiMH battery is dominant in its field.
Rechargeable batteries are a fundamental component of portable electronics,
transportation systems and a host of other applications. More than 750 million
rechargeable consumer NiMH batteries were sold in 1998, and this market is
growing 30 percent annually. All significant manufacturers of NiMH batteries
have agreements with ECD/Ovonic Battery Company.
The Ovonic NiMH battery is based on new hydrogen storage materials invented and
developed by ECD and its subsidiary, Ovonic Battery. The battery represents a
fundamentally new approach to energy storage through the use of engineered
electrode materials made of multi-element alloys that exhibit compositional and
structural disorder enabling desirable battery properties. Ovonic battery
technology breakthroughs are protected by fundamental patents recognized in the
U.S., Japan, Europe and many other nations.
ECD/Ovonic Battery has commercialized its NiMH technology through licensing,
battery manufacturing joint ventures and mass production of battery electrodes
and electrode materials for its own use and for sale to its joint ventures and
licensees.
Ovonic NiMH batteries have moved from concept to commercial production in a
relatively short time.
- - Ovonic Battery Company, Inc., a subsidiary of ECD, was founded in 1982 to
develop and commercialize patented and proprietary NiMH rechargeable battery
technology.
- - Beginning in the late 1980s, the first Ovonic NiMH batteries were
commercialized under license from Ovonic Battery to all significant
manufacturers of small batteries and introduced into the marketplace for
portable electronics applications.
- - In 1993, Ovonic Battery delivered its first EV battery packs for
test and evaluation by vehicle manufacturers.
- - In 1994, General Motors Corporation and Ovonic Battery formed a manufacturing
joint venture, GM Ovonic, L.L.C., to commercialize NiMH batteries
for electric vehicles (EVs).
- - In 1996, GM Ovonic began production of its first generation of NiMH EV
batteries using initial manufacturing equipment and began developing
high-volume processes for battery production.
- - In 1997, Ovonic Battery developed a "Family of Batteries" to power the full
range of EVs and hybrid electric vehicles (HEVs).
- - In 1997, the first NiMH production EV batteries were in daily customer use
and became the battery of choice in the EV industry.
- - In 1998, Ovonic Energy Products, Inc., a wholly-owned subsidiary of
GM Ovonic, L.L.C., moved into a plant in Kettering (Dayton area), Ohio, to
produce advanced NiMH batteries for EVs.
<PAGE>
(Page 19)
Portable Electronics Batteries
Ovonic NiMH batteries were first commercialized in small cell sizes to replace
rechargeable nickel cadmium (NiCd) batteries that were widely used in notebook
computers, cellular telephones and other portable electronics devices. Ovonic
batteries store more than twice as much energy per unit weight as lead-acid or
NiCd batteries. Their characteristics include high power, long cycle life, no
memory effect, and they are maintenance free. Because they are made of
environmentally-friendly materials, their disposal does not pose hazardous waste
problems, in contrast to most conventional batteries. In many applications,
Ovonic NiMH batteries provide a run time that approaches non-rechargeable
(primary) batteries. With a cycle life of 1,000 charges, one Ovonic battery
functionally replaces 1,000 primary batteries.
The current global market for small rechargeable batteries is $4 billion, and
Ovonic NiMH battery licensees include all of the major producers of consumer
NiMH batteries. High energy density Ovonic NiMH batteries are rapidly replacing
the NiCd batteries that once dominated this market.
Electric Vehicle (EV) Batteries
Ovonic NiMH batteries also have become the battery of choice for EVs of all
types. Although Thomas Edison and Henry Ford developed the first EVs at the turn
of the century, vehicles powered by internal combustion engines soon surpassed
them in performance. Now, interest in EVs has returned, driven by concerns over
the quality of the environment.
Yet, until recently, only lead-acid batteries were available for EVs--the same
battery technology that was used in electric cars at the beginning of the
automotive age 100 years ago. Lead-acid batteries could provide only limited
range for EVs. They require many hours to recharge, and they have to be replaced
frequently.
(Picture)
(Caption:)
Consumer batteries that use Ovonic NiMH materials
(Picture)
(Caption:)
ECD's metal-hydride alloy materials and an early NiMH battery cell
(Picture)
(Caption:)
Ovonic Family of Batteries
<PAGE>
(Page 20)
The Ovonic EV battery is a robust, high-performance battery that has all of the
characteristics needed for practical, marketable EVs, and its high energy
density has been responsible for record driving ranges on a single charge. Its
high power density enabled an electric truck to set a world record in an EV race
by climbing more than 14,000 feet to the top of Pikes Peak. The Ovonic EV
battery will last the lifetime of the vehicle, can be recycled, is made of
non-toxic materials, and is highly efficient.
During the 10th anniversary of the Tour de Sol competition, a four-door
Chevrolet GEO Metro with a gasoline engine and an electric version of the same
car--the Ovonic battery-powered Solectria Force--drove a 23.5 mile city route in
mid-town Manhattan. The gasoline-engine car used 2.28 gallons of fuel to cover
the route, while the electric car used 2.87 kWh, the energy equivalent of 0.27
gallons. At $1/gallon for gasoline, it cost $2.28 to power the GEO Metro and
only $0.25 to power the Solectria Force. In city driving, the Metro's 12-gallon
fuel tank would have provided a range of 120 miles compared to the Ovonic
battery-powered Solectria's 220 mile range.
In addition to EVs, automotive manufacturers are also looking at another type of
energy-efficient vehicle--the hybrid EV (HEV). The HEV uses a small-displacement
internal combustion engine in conjunction with a battery-powered electric drive.
The series HEV uses its engine to drive a generator to charge the batteries that
provide power to an electric drive motor. The parallel HEV uses both its engine
and an electric motor to drive the vehicle. In both parallel and series HEVs,
fuel economy is improved and exhaust emissions are reduced in comparison with
similar-size vehicles with conventional internal combustion engines. HEVs with
our batteries can offer at least 80 mpg in the charge- sustaining mode and
approximately 100 mpg in the charge-depletion mode. Only the all-electric
vehicle is classified as a zero-emission vehicle (ZEV) by the U.S. Environmental
Protection Agency.
In the continuing quest for lower emissions, automakers have been investigating
the use of fuel cells that operate on hydrogen. Fuel cell vehicles also use an
NiMH battery for start-up and recovering braking energy.
ECD/Ovonic Battery has undertaken a major development program to meet the
battery requirements of the manufacturers of EVs, HEVs and fuel cell powered
vehicles. The result is our family of Ovonic batteries that exhibit a wide range
of power and energy characteristics suitable for any type of EV, HEV or fuel
cell vehicle.
Record Driving Ranges* of Electric Cars Using Ovonic NiMH Batteries
- - Boston to New York City on the equivalent BTU energy of less than one gallon
of gasoline (Solectria Sunrise, Oct. 1997)
- - 373 miles (Solectria Sunrise, 1996 Tour de Sol)
- - 245 miles (GM Impact, a prototype of the EV-1)
- - 244 miles (Solectria Force, 1996 Tour de Sol)
- - 190 miles (Hyundai Sonata)
* On a single charge
(Call out:)
Ovonic NiMH batteries--the enabling
technology that makes EVs and HEVs practical
<PAGE>
(Page 21)
(Drawing)
Family of Ovonic NiMH Batteries
(Caption:)
Advanced energy storage solutions for electric and hybrid electric vehicles
(Table)
Ovonic NiMH Battery Performance Characteristics
GMO1 GMO2 GMO3** HEV60 HEV20**
Capacity (Ah) 90 100 100 60 20
Specific Energy (Wh/kg) 75 80 95 70 65
Energy Density (Wh/L) 170 200 230 170 160
Specific Power (W/kg)* 225 300 350 630 650
Power Density (W/L) 600 750 850 1,700 1,600
*50 percent DOD
**Preliminary numbers for design under development
(Chart)
Module Voltage vs Current (Amps)
(Chart)
Ovonic NiMH EV Battery DST Capacity
Several potential customers are interested in high-power Ovonic NiMH HEV
batteries because of their ability to accept a very high rate of charge and
their unique high energy density that maximizes driving range. These
characteristics are especially important to HEVs because they need to capture as
much of the energy generated during deceleration and braking as possible. The
more closely matched the charge (deceleration) and discharge (acceleration)
rates of the battery, the better balanced the vehicle drive system will be.
Compared to other types of batteries, including those with high power
capability, the Ovonic NiMH HEV battery excels.
The following chart compares voltage-current characteristics of the Ovonic NiMH
HEV module to a high-power lead-acid battery module during an aggressive HEV
driving cycle. In contrast to the data shown for a typical high-power lead-acid
battery, the slope of the Ovonic NiMH data is constant and shows much lower
resistance on charge. The Ovonic NiMH battery effectively has the same
resistance on both charge and discharge, which means that it has greater
acceptance of regenerative energy during deceleration or braking.
Another important characteristic of Ovonic NiMH batteries is their ability to
perform over a wide range of operating temperatures, which permits thermal
management to be achieved by simple cooling methods. The plot above shows the
temperature dependence of battery performance taken as the dynamic stress test
(DST) capacity under simulated driving conditions. Note that the wide operating
range extends to very low temperatures where other batteries suffer substantial
losses in capacity.
<PAGE>
(Page 22)
First-generation production batteries from GM Ovonic began fleet tests by
several utilities in 1997. Now they are available in the GM S-10 electric pickup
truck and the GM EV1 and are being received enthusiastically. Later generation
EV batteries with increased range and lower prices will be offered by GM Ovonic.
Another particularly attractive market for Ovonic NiMH batteries is electric
motorcycles, scooters and bicycles. India, China, Taiwan and some countries in
Europe have large populations that rely heavily on two- and three-wheel
motorized vehicles that use highly polluting two-stroke internal combustion
engines. Many people in these nations suffer from oppressive air pollution and
related health problems caused in large measure by vehicle emissions.
Electric versions of these vehicles offer many benefits, including:
- - No emissions
- - Lower operating costs
- - Less maintenance
- - Quiet operation
- - Range and performance equivalent to their internal combustion engine
counterparts
The need for these types of EVs is great, and indications are that the market
will develop rapidly. The two- and three-wheel market in India alone is
projected to be four million vehicles annually by the year 2000. Ovonic NiMH
batteries for these applications are being commercialized through licensing and
joint ventures. At this time, leading Japanese manufacturers are evaluating
Sanoh/Ovonic scooter batteries produced in Japan, and a fleet of Ovonic
battery-powered scooters has been delivered for evaluation to Piaggio, a leading
European scooter manufacturer.
ECD/Ovonic Battery is working closely with several groups, including EV Global
Motors Company, a Lee Iacocca enterprise, to develop the important bicycle and
scooter market.
(Picture)
(Caption:)
GM Ovonic 11-cell battery module, the GMO1
(Picture)
(Caption:)
Ovonic NiMH battery-powered scooters and bicycles
(Picture)
(Caption:)
GM's S-10 electric truck for fleet use
<PAGE>
(Page 23)
Sovlux Battery
In March 1998, ECD announced the formation of Sovlux Battery, a new affiliate of
its Russian joint venture, Sovlux. The subsidiary, which is owned 50 percent by
ECD and 50 percent by Chepetsky Mechanical Plant (ChMP) in Glazov, Russia--and
part of the Russian Ministry of Atomic Energy--will produce NiMH battery
materials in Russia for sale to Ovonic Battery and its licensees. It also will
manufacture batteries for the emerging two- and three-wheel EV markets in Europe
and Asia. The use of abundant Russian raw materials, ChMP's alloy processing and
production expertise, and joint collaboration on battery research and
development are expected to result in substantial reductions in the cost of
Ovonic NiMH batteries.
NiMH Battery Applications
There are many markets that require the high energy and power output, long life
and environmentally-friendly design of Ovonic NiMH batteries (see the following
chart). Ovonic Battery's applications engineers are working with its marketing
staff to match battery specifications to product needs. Ovonic Battery worked
closely with Corbin-Pacific, Inc., to develop a cost- and energy-efficient
battery pack for the Sparrow personal transportation vehicle shown above right.
(Picture)
(Caption:) The Corbin-Pacific Sparrow is an Ovonic NiMH battery-powered personal
commuter transportation vehicle
(Table)
Ovonic NiMH Battery Market Opportunities
- - Electric and hybrid electric drives
- - Buses
- - Trucks
- - Passenger cars
- - Two- and three-wheel vehicles
- - Tractors
- - Marine/boats
- - Submarines
- - Telecommunications
- - Aviation
- - Railroads
- - Robotics
- - Portable electronics
- - Portable power tools
- - Motive power--forklift trucks, cranes, etc.
- - Military uses
- - Starter lighting and ignition
- - Wheelchairs and mobility scooters
- - Farm equipment (mobile and stationary)
- - Gas and oil industry
- - Distributed power storage
- - Emergency power
- - Lawn mowers and other garden equipment
- - Standby power (UPS)
<PAGE>
(Page 24)
Ovonic Thermal Hydride Products
The first giant step toward a hydrogen economy already has been taken. When
people drive an Ovonic battery-powered EV or HEV, they are already participating
in the hydrogen economy-- they are "riding on hydrogen." Hydrogen is, without
question, the fuel of the future. Through our efforts, the hydrogen economy is
here now with the use of our nickel metal-hydride batteries that reversibly
store hydrogen in a solid and discharge it in response to an electrochemical
gradient. Hydrogen is the lightest element and the most common one in the
universe. Using it as a replacement for fossil fuels will usher in a profound,
positive change in the world economy.
Ovonic hydrogen storage materials have a wide range of applications other than
NiMH batteries. When the materials absorb hydrogen, they produce a quantity of
heat. Conversely, the alloys will release hydrogen while absorbing heat. By
atomically engineering these alloys, it is possible to produce materials that
absorb/desorb hydrogen over specific pressure and temperature ranges. These
materials can be used for hydrogen storage, hydrogen compression, hydrogen
purification and heat pumps.
ECD's Thermal Hydride Group currently is developing hydrogen storage alloys that
offer high volumetric hydrogen storage densities at low pressures. These storage
systems are ideal to provide the fuel for proton exchange membrane (PEM) fuel
cells that are gaining so much attention. For many years, we have shown that
they also can be used to fuel internal combustion engines with many obvious
advantages.
From the beginning, ECD also has been successful in designing low-cost, highly
efficient catalysts for various applications that have resulted in a great
advantage for our hydrogen systems.
For storing, transporting and using hydrogen, Ovonic hydride products offer
safe, low pressure, high-density alternatives to gaseous or liquid hydrogen.
They offer solutions for a broad spectrum of stationary and portable power
applications, with vehicles being of prime importance.
The use of solar energy and hydrogen taps the resources of our universe rather
than just those of earth. They are the basic building blocks that can be put
together as a system. ECD/United Solar PV panels achieve this unity with
hydrogen by generating the electricity that electrolyzes water into hydrogen and
oxygen. The hydrogen gas may be stored in safe and compact Ovonic metal-hydride
storage devices. A system is being designed for home or small-scale commercial
production of hydrogen that can be used to replace conventional fuels (gasoline,
diesel fuel and propane) for cooking, for use in lawn and garden equipment, and
for use in small fuel cell or internal combustion engine vehicles such as
scooters. The system is totally pollution-free and economical, and it can be
scaled to any desired size.
The world has another urgent need--for clean water. Our PV products are an ideal
component of a water desalination system when they are used to generate
electricity to pump brackish and pure water and also to split brackish water
into its constituents--hydrogen and oxygen. The hydrogen can be stored for later
use and recombined with oxygen in, for example, a fuel cell to produce
electricity and potable water.
Hydrogen was born in the Big Bang; the sun exists by burning its hydrogen; we
tap into the ultimate nondepleting, nonpolluting energy source in the universe.
<PAGE>
(Page 25)
THIN-FILM MATERIALS
High-Rate Deposition for Low-Cost Products
Throughout the 1980s, ECD developed a range of advanced vapor deposited
thin-film materials and production technologies, including a high-rate microwave
plasma chemical vapor deposition (MPCVD) process. This unique high-speed process
uses our atomic engineering of materials for many commercial applications. The
company currently is pursuing two of those applications--high-performance
optical coatings and commodity barrier films.
Optical Films
ECD's MPCVD process has been applied in the development of novel, low-cost,
transparent thin-film optical coatings that selectively absorb, reflect or
transmit certain types of electromagnetic radiation. These coatings have a wide
range of commercial applications--from anti-glare screens for computer and
television displays to solar-control windows for architectural and automotive
applications.
Today, high-quality optical coatings are produced by magnetron sputtering, a
costly and decades-old technology. ECD recently demonstrated that its high-speed
MPCVD technology can produce coatings with the optical, mechanical and
uniformity specifications required for high-quality optical coatings at
approximately one-tenth the cost of current technology.
ECD also is engaged in a development program under the auspices of the U.S.
Department of Energy to develop a new generation, selective solar radiation
control (low emissivity) coating to reduce summer heat buildup in automobiles.
The technology is expected to lower the cost of these films significantly and to
lead to market expansion in the future.
Barrier Films
Another important application is transparent barrier coating for plastic
beverage containers and flexible packaging films. An extremely thin coating
(less than one millionth of an inch thick, or 1/50th of a wavelength of visible
light) of ECD's MPCVD amorphous silicon oxide (quartz glass) improves the oxygen
and water vapor barrier of commodity flexible and rigid packaging films by about
a factor of 100. By blocking oxygen and water vapor transmission, the shelf life
of food, beverages, pharmaceuticals and other types of sensitive products is
extended. The barrier coating provides the protection of aluminum and other foil
wraps and opaque materials, but it costs less and it is completely transparent,
microwavable and recyclable.
(Picture)
(Caption:)
Roll-to-roll coating machine deposits low-cost, ultra-thin transparent film
on rolls
<PAGE>
(Page 26)
MACHINE-BUILDING DIVISION
For each product application of its engineered amorphous and disordered
materials, ECD develops the production process and designs and builds the
production machinery. This contributes to the company's ability to move
new technology from the concept stage, through the R&D and pilot production
stages, and into volume production. It also provides other business
opportunities for our machine-building division.
ECD's Production Technology and Machine-Building Division has extensive
experience in designing and building volume production, pilot production and
R&D machinery for various commercial customers as well as for its own use
and for its business affiliates.
The division has designed and built seven generations of photovoltaic production
lines, production equipment for Ovonic battery materials, and R&D and
manufacturing equipment for its barrier film, information and other materials
technologies. The division also has built specialized equipment for licensees
and other customers that require advanced vacuum coating technology.
As the markets for ECD technologies continue to grow, the division expects to
continue to receive major machine-building contracts, thereby adding to the
company's return on its technology investments.
In summary, we invent the materials, the products and the production technology
to build important new needed industries.
(Picture)
(Caption:)
Ovonic optical/electronic memory research and development machine
(Picture)
(Caption:)
Five megawatt roll-to-roll solar cell deposition machine built for United Solar
(Picture)
(Caption:)
Internal view of United Solar's 5 MW solar cell processor
<PAGE>
(Page 27)
ECD ASSET VALUES
Patents/Intellectual Property: 354 United States, 846 Foreign
Joint Ventures and Subsidiary:
United Solar Canon invested $58MM+ for its 49.98%
(49.98% owned by ECD) interest
GM Ovonic GM is investing $20 MM for its 60% interest
(40% owned by Ovonic Battery)
Sovlux KVANT & Minatom invested $15 MM+ for their
(50% owned by ECD) 50% interest
Ovonic Battery Company 20+ licensees
(91.4% owned by ECD) Sanyo, Sanoh and Honda each purchased an
interest in Ovonic Battery which values
the Ovonic Battery Company at approximately
$150MM
Capital Equipment: Replacement value is $15MM+
Tax Loss Carryforwards: $42 MM in reduction of future income taxes
<PAGE>
(Page 28)
ECD PEOPLE
Human Resources
At ECD, people are the most important asset that appreciates in value, unlike
capital that depreciates in time.
Human Relationships
We aspire to a high standard of excellence in human relationships. Specifically,
we intend:
1. To select and place employees on the basis of qualifications for the work
to be performed--without discrimination in terms of race, religion, national
origin, color, sex, age, or handicap unrelated to the task at hand.
2. To place people only on jobs which are truly productive and necessary for
achievement of organizational objectives.
3. To show each employee the purposes of his or her job and work unit, and
insist that work be done efficiently and well. We ask that people give
their best efforts, including their ideas and suggestions for improvement.
4. To maintain reasonable standards of work, and strive to offer people
opportunities to be challenged and make the best use of their abilities
and energies.
5. To encourage self development, and assist employees in improving and
broadening their job skills.
6. To protect people's health and lives. This includes maintaining a clean,
safe work environment as free as practicable from health hazards.
7. To provide employees with timely information concerning company operations
and results, as well as other work-related matters in which they logically
have an interest.
8. To promote from within the corporate organization--in the
absence of factors that persuasively argue otherwise.
9. To compensate people fairly, according to their contributions to the
company, within the framework of national and local practices.
10. To develop human relationships that inspire respect for, and confidence and
trust in, the company. We also insist that not only rights but values of
co-workers be respected.
11. To place operating decisions at the lowest level in the organization at
which they can be competently resolved. This includes giving employees
opportunities, commensurate with their capabilities, to make decisions
that will lead to improved performance.
12. To create an environment which develops a feeling of responsibility within
every employee for the overall performance and well-being of ECD--especially
as we seek improvement in containment of costs, avoidance of waste,
adherence to quality standards, greater productivity, and better utilization
of assets.
13. To give special effort to working directly with each other in a helpful,
friendly way--seeking to avoid bureaucracy and other hazards common to large
organizations--and remembering the Golden Rule is as applicable to human
relationships in the work place as it is in the community and home.
(From ECD's long-standing Corporate Values and Operating Principles)
<PAGE>
(Inside Back Cover and Flap:)
THE PEOPLE OF ECD AND ITS AFFILIATES
Pictures of some of the people who make the magic happen at ECD
<PAGE>
(Outside Back Cover Flap)
ECD MANAGEMENT
(Picture)
(Caption:)
Bob Stempel with Ken Baker
(Picture)
(Caption:)
Stan and Iris Ovshinsky welcome Tyler Lowrey
(Picture)
(Caption:)
Top row from left to right:
Nancy M. Bacon
Stephan W. Zumsteg
Roger John Lesinski
Ghazaleh Koefod
Subhash K. Dhar
Marvin S. Siskind
(Caption:)
Bottom row from left to right:
Kenneth R. Baker
Robert C. Stempel
Stanford R. Ovshinsky
Iris M. Ovshinsky
Tyler Lowrey
<PAGE>
(Back Cover)
Energy Conversion Devices, Inc.
1675 West Maple Road
Troy, Michigan 48084 U.S.A.
Telephone: 248.280.1900
Fax: 248.280.1456
e-mail: [email protected]
www.ovonic.com
Stockholders are encouraged to read the Company's Annual Report on Form 10-K
carefully, including the information contained in the section Cautionary
Statement for Purposes of the "Safe Harbor" Provisions of the Private Securities
Litigation Reform Act of 1995.
This paper meets or exceeds EPA guidelines for recycled papers.
ECVCM-TPB-98
